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Cash advance credit cards

Cash advance credit cards

You can use credit cards to withdraw cash, but this can mean paying expensive fees and a higher interest rate than usual. Plus, it’s not only taking out cash that credit card providers treat as a cash advance. Find out what you need to know about cash advances and credit cards.

Anelda Knoesen
From the Money team
minute read
posted 9 JANUARY 2020

What is a credit card cash advance?

A cash advance allows you to withdraw cash on your credit card, up to a certain limit. The service is available with most credit cards, but you’ll need to pay the balance back with interest.

When you make purchases on your credit card, there is often a ‘grace period.’ This means that you only pay the interest on your outstanding balance when you receive your credit card statement. However, when you use it for a cash advance, you’ll typically start paying the interest straight away and at a higher rate.

What transactions are considered a cash advance?

Other transactions can be considered a cash advance, even if you don’t withdraw any cash. These can include:

  • Making a mortgage payment
  • Paying a utility bill
  • Buying travel money and travellers' cheques
  • Buying foreign currency
  • Buying gift vouchers
  • Betting or gambling (including lottery tickets and most transactions in a casino)
  • Making an electronic cash transfer (for example, transferring money from your credit card to a current account)

If you're considering making one of these transactions, it's worth checking with your credit card provider first to see how it will be treated to avoid paying expensive fees.

How can you withdraw cash on your credit card?

You can take out a cash advance on your credit card by:

  • Using your PIN at an ATM
  • With your ID at your provider’s branch
  • Getting cashback when you make a purchase in a shop

You can withdraw cash up to your cash advance limit, which may be lower than the credit limit you're given for purchases. Check what your limit is with your provider.

Once you've withdrawn the cash, try to pay off your credit card bill as quickly as possible – don’t wait for your next credit card statement if you can. Cash advances get charged a higher rate of interest, so pay it off as soon as you can to minimise the amount of interest you'll pay.

What’s the charge for withdrawing cash on a credit card?

Each time you make a cash withdrawal using your credit card, you’ll be charged interest on the amount you withdraw from the day you take it out until you pay off the balance. This is known as the daily fee. You’ll also typically have to pay a cash advance fee, which may be a fixed fee or a percentage of the amount you’ve withdrawn. If you’re withdrawing cash abroad, then you could face additional charges.

Can I withdraw cash abroad?

You can withdraw cash on your credit card abroad but there will be a foreign usage fee, in addition to the cash advance and interest fees. This could be anything from 2.50% to 2.99% of the amount you withdraw. If you withdraw in sterling rather than the local currency, you’ll also face a dynamic currency conversion (DCC) fee, which is almost always more expensive than your credit card provider’s currency conversion fee.

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